Following the consultation, the new statutory code of practice and dismissal and re-engagement recently came into force on 18 July 2024 ("the Code"). A link to the Code can be found here.
The Code sets out a recommended procedure to follow when an employer is considering making changes to the terms and conditions of an employee's contract and emphasises that dismissal and re-engagement should be used as a last resort.
Summary of steps
We have set out below a brief summary of the practical steps an employer is advised to take:
- Information sharing: Information should be provided by the employer as early as reasonably possible and on an ongoing basis to enable employees and their representatives to understand the reasoning for the proposed changes.
- Meaningful consultation: Employers must openly consult for as long as reasonably possible with the employee and in good faith.
- Raising the prospect of dismissal and re-engagement: The employer should make clear, if at any point, it intends to opt for dismissal and re-engagement, if an outcome cannot be agreed. Acas should also be contacted before raising the prospect of dismissal and re-engagement.
- Re-examination: Once it has been determined that the employer and employee do not agree to the necessary changes to the employment contract, the employer should re-examine its proposals, including any employee feedback. The Code also sets out various factors to be considered.
- Communication of agreed changes: If changes are agreed, these changes must be communicated to affected employees in writing.
- Unilateral imposition of new terms: If the changes are not agreed and the employer decides to impose the new terms, it is recommended to first check the contract to determine if they have the power to do so. If not, the employer should consider the legal risks associated with implementing the proposed changes.
- Dismissal and re-engagement: If the employer has conducted a thorough consultation process as set out above and the changes cannot be agreed with the employee, it may opt for dismissal and re-engagement as a last resort.
Implications for employers
Whilst it is a not a legal obligation to follow the Code, the Code can be taken into account by the Employment Tribunals. If the employer has unreasonably failed to follow the Code, compensation can be increased or reduced by up to 25% in certain claims, including unfair dismissal. The compensation adjustment will not apply to the protective award in collective redundancy cases as the necessary amending legislation was not implemented.
The future of the code
Following Labour Party's success in the recent general election, the implementation of this Code in this format may be short-lived. During the King's Speech 2024, the new Labour government has labelled the Code "inadequate" and announced its plan to implement a strengthened code of practice and to introduce the Employment Rights Bill which is expected to ban the practice of dismissal and re-engagement.
If you would like any assistance with regard to the issues raised in this update please do not hesitate to get in touch with our experts.
Authored by Claudia Webb
